Exhibit
10.36


 


	
  TO

  	
  RAILROAD COMMISSION OF TEXAS

  	
   

  
	
   

  	
  Attention  Oil
  & Gas Division

  	
   

  
	
   

  	
  Permitting /Production, P-5 Financial Assurance
  Section

  	
  P-5LC

  
	
   

  	
  P O. Box 12967

  	
  rev 1/2008

  
	
   

  	
  Austin, TX 78711-2967

  	
  IRREVOCABLE
  DOCUMENTARY

  	
   

  
	
   

  	
   

  	
  BLANKET
  LETTER OF CREDIT

  	
   

  
					



 


We
hereby establish our Irrevocable Documentary Blanket Letter of Credit in favor
of the Railroad Commission of Texas, Austin, Texas the account of RESACA
OPERATING COMPANY (operator’s name), for the aggregate amount of TWO HUNDRED FIFTY THOUSAND
AND 00/100 Dollars ($250,000.00) available
by your drafts at sight on the bank when drawn in accordance with the terms and
accompanied by the documents listed below:


 


A.           This Blanket Letter
of Credit is issued in connection with the filing of a P-5 Organization Report
(P-5) with the Commission as required by -§91.142, Texas Natural
Resources Code (TNRC) in order to perform operations within the jurisdiction of
the Railroad Commission of Texas, including but not limited to (1) operations
listed in the Commission’s P-5 Organization Report records (P-5 records) for
the operator, and/or (2) wells listed on the Commission’s Oil and Gas
Proration Schedules (Schedules), and any additional wells that may be obtained
prior to the expiration of this Blanket Letter of Credit and carried on the Oil
and Gas Proration Schedules. Said P-5 records and Schedules are incorporated
herein by reference as if fully set forth at length.


 


	
  1. Organization
  Name, exactly as shown on Form P-5 Organization Report

  	
   

  	
  2. P-5
  Number, if assigned

  	
   

  	
  3. Total #
  of operator’s wells:

  	
   

  	
  Total aggregate depth of all
  wells:

  	
   

  
	
  RESACA OPERATING
  COMPANY

  	
   

  	
  703238

  	
   

  	
  490

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4. Other
  Commission-regulated operations. See bond instruction sheet, paragraph F.
  [check appropriate operations, example: operating a pipeline I]

  	
   

  	
  Other operations not included
  in (A) – (L).

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (A)  o  (B)  o  (C)  o  (D)  o  (E)  o  (F)  o

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (G)  o  (H)  o  (I)  o  (J)  o  (K)  o  (L)  o

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


B.        The operator and
the issuer of this Blanket Letter of Credit acknowledge and agree that, due to
amendments to the Texas Natural Resources Code, amendments to Commission Rules,
and/or changes to the operator’s Commission-regulated operations, including without
limitation the acquisition of additional wells, operator may be required during
the effective term of this Blanket Letter of Credit to provide additional
financial security beyond the face amount of this Blanket Letter of Credit
before its P-5 Organization Report will be accepted and approved.


 


C.        This Blanket Letter of Credit
is specifically issued at the request of the operator as guaranty that this
fund will be available during the time that the operator is performing Commission-regulated
operations. We are not a party to, nor bound by, the terms of any agreement
between you and the operator out of which this Blanket Letter of Credit may
arise.


 


D.       Drafts drawn
under this Blanket Letter- of Credit must be accompanied by
an affidavit from the Railroad Commission of Texas or an authorized
representative, stating that:


 


1.               a well or other oil and gas operation or activity
subject to this Letter of Credit is likely to pollute or is polluting any ground or surface water or is allowing uncontrolled escape of
formation fluids from the strata in which they were originally located; or


 


2.               a well or other
oil and gas operation or activity subject to this Letter of Credit is not being
maintained in compliance with Commission rules or state law relating to plugging or the prevention
or control of pollution; or


 


3.               a well or other
oil and gas operation or activity subject to this Letter of Credit is not
polluting any ground or surface  water or allowing  uncontrolled escape of
formation fluids from the strata in which they were originally located, but the
operator has failed to maintain current operator status as  reflected on the Commission’s P-5 records;


 


AND


 


4.               the draft is in
the estimated cost of plugging each well (an amount otherwise impossible to
determine as to the exact amount but which is estimated by multiplying the
total depth by $2.50 per foot), closing any other operation or activity or
controlling, abating, or cleaning up pollution.


 


We
will be entitled to rely upon the statements contained in the affidavit and will have no
obligation to independently verify any statements contained therein.


 


(over)


 

















 


Each draft hereunder must
be endorsed on the reverse side of this Blanket Letter of Credit, and this Blanket
Letter of Credit must be attached to the last draft when the credit has been
exhausted. Drafts may be presented at the office of this bank no later than 2:00
pm. (local time) on MARCH 1, 2010 (date must
be 90 days after the operator’s P-5 expiration date), and bear the clause
“Drawn under the AMEGY
BANK N.A. (Bank name), Bank Letter of Credit No. SC 6123, dated DECEMBER
30, 2008”


 


We
hereby engage with the bona fide holders of this draft and/or documents
presented under and in compliance with the terms of this Blanket Letter of Credit
that such  draft and/or documents.will be duly honored upon
presentation to us.


 


Our
obligations hereunder shall not be subject to any claim or defense  by reason of the
invalidity, illegality, or unenforceability of any of the agreements upon which
this Blanket Letter of Credit is based. This Documentary Blanket Letter of Credit
is subject to the “Uniform Customs and Practice for Documentary Credits” (2007
Revision) fixed by the International Chamber of Commerce (Publication #600), when
not in conflict with the express terms hereof or with the provisions of Article Five
of the Texas Business and Commerce Code.


 


	
   

  	
  Bank name

  	
  AMEGY BANK N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Brian Duncan  
  /s/ James A. Ardissono

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name)

  	
  Brian Duncan, SVP  
  James A. Ardissono, VP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Title)

  	
  (713) 232-2095

  
	
   

  	
   

  	
   

  	
  Tel.    Area
  Code    Number

  



 


(seal)


 


ATTEST


 


Address of Bank


 


	
   

  	
   

  	
  4400 Post Oak Parkway, 2nd Floor

  
	
  Assistant Cashier or Cashier

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Houston, Texas 77027

  
	
  Date:   month day year